Jun 17

Summer Funding: Why It’s Hard To Close A Round During Burning Man

Years ago I went to Burning Man, this is my favorite memory.

The standard joke is that VCs take the entire summer off.  It isn’t true, but there is a good reason for the myth: it’s almost impossible to close a funding round over the summer.

The reason for this is quite simple, most deals require consensus of the partnership, and while no individual partner takes the entire summer off, at any time at least one decision maker is out of town with their kids. Or off on the Playa for Burning Man.

This means that the longer or more complex a funding is, the less likely it will happen over the summer.  Raising a seed round from a single micro VC? Sure, that is likely to get done. I even know of one micro VC that loves to close summer deals since they’re “the only game in town.” But if you’re raising a $50M Series C from a new lead that includes follow on investments by two other VCS? That’s probably not happening until after Labor Day!

If you need sign off from multiple investors, plan ahead so that you aren’t caught in the situation where there is always someone out of town.

Mar 15

Seedcamp Podcast

Carlos brought the latest batch of Seedcamp companies by the office on Monday, they are an impressive group, and afterwards we sat down and recorded an episode for his podcast. In it we discuss a bit about my background, security funding, technical founders, and the CTO summits; it isn’t too long at 24 minutes. I hope you enjoy it.

Oct 14

The Next Twitch.tv

Let’s start with a confession; I like to watch video games. Even when I was a kid, I preferred watching my friends to playing myself. In a fighter plane I’d be the the navigator.

It is rare for me to be on the front edge of a consumer trend since my hobbies tend to be pretty geeky. But when Twitch TV came along, I was an early adopter; I had already watched hours of gameplay videos on YouTube.

A while back someone wrote a piece about unbundling YouTube in which they stated that Twitch.tv was the first step. (Sadly, I can’t remember who wrote it, and my Google Fu was not up to the challenge of finding it.) My thought is that an obvious next step is “haul videos”.

Shopping haul

Haul videos are when people unpack their shopping and show their followers what they purchased. A subset of the haul video is unboxing, where the host unboxes anything from high-end tech gadgets to cheap toys. The New York Times Magazine has an article about a woman who is making millions unboxing Disney toys.

Clearly people love this content, and YouTube isn’t designed with this in mind. There are such obvious ways to monetize and brands should be all over this. I’d love to see someone create a site for this niche since I think it will be huge once it goes mainstream

Jun 14

BlackNet Lives, Sell Your Secrets Here

In my post about the Cypherpunks I stated that some of their ideas, like ransom publishing and digital currencies, had finally come of age. Well another one just came to my attention black market information bizarres.

On the Cypherpunks list Tim May described BlackNet:

BlackNet is in the business of buying, selling, trading, and otherwise dealing with *information* in all its many forms.

Well, now there is PayPub, a system that allows a leaker to get paid as they anonymously release data:

Trustless provably fair information marketplace ========================================

“PayPub: Trustless payments for information publishing on Bitcoin” Scheme by Peter Todd Code by Amir Taaki

This is just a proof of concept prototype, but the code is out there for anyone who wants it.


May 14

Startup Memes: Github for X

<I actually wrote this several weeks ago, but then life got in the way. I think it is still relevant.>

This is the first in a (hopefully) recurring theme of posts discussing patterns I’m seeing in startup companies.

For the past few months I’ve seen a number of companies that can be described as Github for X. Basically an open storage platform where people can fork off projects. While I’ve seen a bunch of others, some good examples are:

Partly this is probably due to Githubs big fundraise. But another aspect is probably that coders are starting to branch out to other domains and they are trying to bring their tools with them.

Back in the dark ages we used RCS & CVS to track source changes. They were hard to use in teams and didn’t scale well to the Internet. Today we have incredibly powerful tools with integrated sharing platforms.

For those who’ve used these tools with a distributed team you know how powerful they can be. It is only natural that people will want to bring them to other domains.

Apr 14

Coder Whisperer or How to Energize Your Dev Team


Given my  background, an odd thing happens when I am the only technical person in a business discussion; I am often turned to as the code whisperer. Non-technical founders and board members will ask me how coders will react to something or what would get them excited.

The problem: while many people are extrinsically motivated (from the outside) by things like money or responsibility to the team, most hackers are motivated by interesting problems. Smart people understand this; what befuddles them is what makes a problem interesting to a hacker.

Things that might seem trivial to an end user, a game of boggle or sorting a list of names for instance, can house some very interesting puzzles for a programmer. To make matters more difficult, not all coders find the same types of problems interesting. A seemingly mundane problem may give a hacker the chance to explore a path they are curious about. haystacks Think of Monet’s Haystacks, it is highly unlikely that the painter had an innate interest in the making of hay, instead he used the haystacks as a way to explore the nature of light and how colors changed throughout the day. Programmers can do the same sort of exploration within a problem. For instance, they may use a project to learn a new programming language or explore a new development framework. Some common interest areas:

  • Algorithms
  • Scaling to large numbers of users
  • Using new languages or frameworks
  • Data Science
  • Optimizing an application to run fast

This isn’t to say that you can cleverly wrap up a problem and fool someone into working on it, instead this gives you the best chance of finding problems that your programmers will want to work on. Like most people, hackers want to work with great people. So the best way to get a great team of hackers is to start with one alpha hacker. But knowing how programmers think will give you a huge leg up in the hiring department and let you find projects that will excite the best and brightest.

Oct 13

My Virtual Office

I’ll have my people talk to your people and set something up.

I’ve always wanted to say that. And recently a founder and I needed to find time to grab breakfast, so his person consulted my person and a meeting appeared on our calendars.

The wrinkle: we both have the same people.

Enter Super Calendar.  Part human, part software, all awesome for $80 a month.  They will schedule meetings according to your preferences and put them directly on your calendar.

Uber Conference is another service I’ve recently found that I can’t live without.  It makes scheduling conference calls a breeze, and the ability to see who is talking is a feature you didn’t know was necessary until you tried it.

Finally, I used my Fancy Hands team to take this handwritten blog post and transcribe it.  I like to write in my moleskin notebook since it prevents me from getting distracted by the web.  

Fancy Hands makes this process as easy as typing my first draft, but without the distractions of web connectivity. They even found the comic above when I wrote: “<Insert comic about The Internet vs. Term Paper>”.

Now that’s awesome service.


Oct 13

Crowd Funding: Angels, Not VCs, Will Get Disrupted

I wrote this before Angel List syndication was really being talked about. I’ve decided to post this and I’ll do a follow up on Angel List in a week or two, once I’ve had time to really think that through, but I still stand by what I’ve written below. 

There has been a lot of discussion about how the crowd funding portion of the Jobs Act will affect the startup investment community.  As part of my Kauffman Fellowship project, I spent some time researching the subject and came to the following conclusions.

First, it bears noting that crowd fundable companies are a superset to Startups (see Paul Graham’s essay for a good definition of Startup).  Funding for businesses that don’t have the potential to scale will be done via crowd funding, not by historical startup investors.

My belief is that traditional VC may be disrupted some but that angels and micro VC’s will need to make larger changes.

Why don’t VC’s get disrupted as much as Angels?

Deal flow:  Crowd Funding and general solicitation will give founders the ability to access a wider pool of capital.  For traditional angels this gives them greater access to deal flow but also more competition.

VC’s are looking at companies full time and they generally don’t need more deal flow, thus this will have a much larger effect on angels.

Winning deals:  When a deal is hot and different forms of funding are competing for access, who will win?

If a founder wants only cash, then crowd funding may have the upper hand here, but this is rarely the case.  Most founders want things in addition to money:

  • Access to a rolodex
  • A sounding board for ideas
  • Advice and another point of view
  • Follow on capital and / or fundraising help

While the crowd may theoretically be able to provide these functions, it would be in a very inefficient manner.  Soliciting advice from board members is a task, doing it from 75 angels would be a nightmare.

Follow on capital:  Savvy founders have already begun to worry about the “party round” where several angels or micro VC’s all invest a small amount.  The issue companies have run into is that no one is really invested enough to make the effort to ensure the company can raise further financing or lead a bridge in the case of a hiccup.  Better to have one or two investors who really care than ten who are simply interested.

Introductions:  Trying to figure out which of the 30 investors will give the best intro to a potential partner will be problematic.  Maybe a software platform can help with this, but if so I haven’t seen it yet.  If you happen to be developing one get in touch with me please.

Finally, many traditional venture firms have moved to B & C rounds.  When you need to deploy $600M it is much easier if you write big checks.  The industry is still in the process of a shake out, but those left standing will have more capital in the future if returns revert to the mean. (If they don’t then the whole ecosystem is going to have to change radically.)

For all of these reasons, I expect crowd funding to have a much larger effect on angel communities than on venture partnerships.  But either way, I’m looking forward to seeing it all play out.

Sep 13

Should CEOs Code?

coding_punch cardsI recently sat down with Peter Bell, an excellent tech trainer, to discuss an array of things. I had in my mind a prototype for this blog post that Peter promptly sunk.

My original idea was to write about outsourcing development and why I hate it ( I still do), and the stance I was intending on taking was “Hey ‘business-guy’ learn to code!”

So how did Peter change my attitude? He pointed out that much of learning to program is syntax, and neither of us thought this was important for a CEO to know. What I wanted was for the business guy to be able to speak the same language as the devs, and to have some intuition about which problems are hard and which are easy. In my CS program at Purdue this was mostly covered in the 2nd or 3rd CS course, after we had taken an intro to programming course.

Peter is actually working on a class to teach these skills to business folks, and I respect that a lot. He actually has a couple of questions he suggests people ask when trying to find a technical founder.

What revision control system do you use and why did you choose it?

One doesn’t need to know the answer but instead listen to the thought process of the engineer. A good engineer will have tried a few solutions and have chosen the system for a couple of salient reasons. A bad or novice dev will have chosen based on ‘everyone else uses it’  or ‘ it’s what I was taught’.

Peter has a number of other such questions but the principle remains the same: ask a question about technology and listen to the process the developer used to come to the answer. If that process was rigorous and thoughtful then you’re probably talking to a pro.

While I still think outsourcing development is a terrible idea, I am now less convinced that an intro to programming class is a complete answer. One really needs to understand CS design rather than a programming language. Of course, if you’re young you should still learn to code before Skynet takes over.

Aug 13

Replaced by a Box: Which Stores Will be Disrupted by Vending Machines

KeyMe Kiosk

I’ve been thinking about vending machines a good bit after seeing the KeyMe demo given at NYTM. You simply scan your key using an app, and then their system stores it for free. If you ever need a copy, you just go to one of the KeyMe locations and it is made by the machine. This works 24/7 and requires no poor sap to do the grinding. Clearly this, or something like it, will replace key making at hardware stores.

Certainly key duplication isn’t the first business to get upended by vending machines; Redbox put a huge dent in Blockbuster after they started stocking DVD’s instead of Happy Meals. Big box stores like Best Buy have even begun to put vending machines in airports and malls as a way to reach more customers.

There have been some predictions that haven’t panned out though: back in the late 90’s people envisioned that books would be printed on demand, but the Kindle leap frogged that.

So what other types of vending machines will we see, and what will 3D printing allow?  I’m going to limit this list to physical goods, so no media and no services. Below are my guesses with my reason on why they would work.

  1. Glasses:  A vending machine might 3D print the frames. This is a good candidate since there are very few sizing issues and high margins. You can even imagine a world where you go into a small booth, get your eyes checked, and walk out with glasses without ever talking to an optometrist.

  2. Pharmaceuticals:  Again, high margins and tiny form factor. Why bother going to a pharmacist?

  3. Cosmetics: This has already been done in some places. Their is no sizing issue and the margins are good.
  4. Hipster T-Shirts:  Okay, just T-Shirts.  Limited number of standard sizes and you can print the shirt in a matter of minutes.

  5. Phone cases:  Easy to 3d print and, judging by the stores in Chinatown, there is plenty of demand.

  6. Shoes:  There has been a lot of work on 3d printed shoes.  Nike and New Balance have already started this on a bespoke basis.

  7. High end coffee or juice:  One would need to get past the stigma of hospital waiting room coffee machines, but I’m sure it is possible.  People often get drinks to go so the convenience would be high.

So those are the kiosk ideas I have, but if you have an innovative kiosk idea let me know in the comments.